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Farm Credit System: Difference between revisions
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{{Short description|Network of financial institutions}} | {{Short description|Network of financial institutions}} | ||
{{ | {{Program | ||
|ProgramName=Farm Credit System | |||
|ProgramType=Program | |||
|OrgSponsor=partnership | |||
|CreationLegislation=[[Federal Farm Loan Act]] | |||
|Mission=To provide reliable, consistent credit and financial services to support agriculture and rural communities. The Farm Credit System aims to be a dependable source of capital for farmers, ranchers, and rural infrastructure providers. | |||
|Website=https://www.farmcredit.com | |||
}} | |||
'''Farm Credit System''' (FCS) is a nationwide network of borrower-owned lending institutions and specialized service organizations. Its purpose is to offer credit and financial services specifically tailored to meet the needs of agricultural producers and rural communities. A notable aspect is its cooperative structure where borrowers are also owners of the credit institutions. | |||
It is a nationwide network of borrower-owned lending institutions and specialized service organizations. The Farm Credit System provides more than $373 billion (as of 2022)<ref>{{cite web |title=2022 FCA Annual Report |url=https://www.fca.gov/about/reports-publications |access-date=19 July 2023 |website=FCA |publisher=Farm Credit Administration}}</ref> in loans, leases, and related services to farmers, ranchers, rural homeowners, aquatic producers, timber harvesters, agribusinesses, and agricultural and rural utility cooperatives. As of 2021, the Farm Credit System provides more than 45% of the total market share of US farm business debt.<ref>{{cite web |title=2022 FCA Annual Report |url=https://www.fca.gov/about/reports-publications |access-date=22 August 2024 |website=FCA |publisher=Farm Credit Administration}}</ref> | |||
{{Official URL (simple)|url=https://www.farmcredit.com}} | |||
==Background== | |||
Congress established the Farm Credit System in 1916 to provide a reliable source of credit for farmers and ranchers, <ref name=":0">{{Cite journal |last=Shaw |first=Christopher W. |date=2018 |title='Tired of Being Exploited': The Grassroots Origin of the Federal Farm Loan Act of 1916 |url=https://www.jstor.org/stable/10.3098/ah.2018.092.4.512 |journal=Agricultural History |volume=92 |issue=4 |pages=512-540 |via=JSTOR}}</ref> by making loans to qualified borrowers at competitive rates and providing insurance and related services. | Congress established the Farm Credit System in 1916 to provide a reliable source of credit for farmers and ranchers, <ref name=":0">{{Cite journal |last=Shaw |first=Christopher W. |date=2018 |title='Tired of Being Exploited': The Grassroots Origin of the Federal Farm Loan Act of 1916 |url=https://www.jstor.org/stable/10.3098/ah.2018.092.4.512 |journal=Agricultural History |volume=92 |issue=4 |pages=512-540 |via=JSTOR}}</ref> by making loans to qualified borrowers at competitive rates and providing insurance and related services. | ||
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== Criticism == | == Criticism == | ||
The Farm Credit System and a number of FCS banks have faced criticism of their practices. In March 2016, the [[Federal Farm Credit Banks Funding Corporation|FCS Funding Corporation]] disclosed that 45.5% of total FCS taxpayer-subsidized loans outstanding as of year-end 2015 had been borrowed by only 4,458 borrowers.<ref>{{Cite web|url=http://bankingjournal.aba.com/2016/04/in-2015-almost-half-of-fcs-lending-goes-to-just-4458-borrowers/|title=In 2015, Almost Half of FCS Lending Goes to Just 4,458 Borrowers|last=Ely|first=Bert|date=April 5, 2016|website=ABA Banking Journal|publisher=[[American Bankers Association]]}}</ref> Critics, such as the [[American Bankers Association]], also charge that FCS banks only make large loans (more than $1 million) and are making loans with tax-exempt earnings that have almost nothing to do with farming, such as to [[Verizon Communications]] and [[Cracker Barrel]]; defenders justified [[CoBank|CoBank ACB]] loans to Verizon and [[Frontier Communications]] because they provide landline voice service, Internet and wireless access and other services to rural areas.<ref>{{Cite news|url=https://www.washingtonpost.com/business/capitalbusiness/critics-says-farm-credit-system-needs-to-be-reined-in/2016/04/11/b3ce0dd2-fb6a-11e5-9140-e61d062438bb_story.html|title=Critics say Farm Credit System needs to be reined in|last=Heath|first=Thomas|date=April 11, 2016|newspaper=The Washington Post}}</ref> | The Farm Credit System and a number of FCS banks have faced criticism of their practices. In March 2016, the [[Federal Farm Credit Banks Funding Corporation|FCS Funding Corporation]] disclosed that 45.5% of total FCS taxpayer-subsidized loans outstanding as of year-end 2015 had been borrowed by only 4,458 borrowers.<ref>{{Cite web|url=http://bankingjournal.aba.com/2016/04/in-2015-almost-half-of-fcs-lending-goes-to-just-4458-borrowers/|title=In 2015, Almost Half of FCS Lending Goes to Just 4,458 Borrowers|last=Ely|first=Bert|date=April 5, 2016|website=ABA Banking Journal|publisher=[[American Bankers Association]]}}</ref> Critics, such as the [[American Bankers Association]], also charge that FCS banks only make large loans (more than $1 million) and are making loans with tax-exempt earnings that have almost nothing to do with farming, such as to [[Verizon Communications]] and [[Cracker Barrel]]; defenders justified [[CoBank|CoBank ACB]] loans to Verizon and [[Frontier Communications]] because they provide landline voice service, Internet and wireless access and other services to rural areas.<ref>{{Cite news|url=https://www.washingtonpost.com/business/capitalbusiness/critics-says-farm-credit-system-needs-to-be-reined-in/2016/04/11/b3ce0dd2-fb6a-11e5-9140-e61d062438bb_story.html|title=Critics say Farm Credit System needs to be reined in|last=Heath|first=Thomas|date=April 11, 2016|newspaper=The Washington Post}}</ref> | ||
==Goals== | |||
* To ensure a steady source of capital for agricultural businesses, enhancing their ability to operate and expand. | |||
* To support rural infrastructure and community development through tailored financial products. | |||
* Maintain financial stability and ensure the sustainability of rural economies. | |||
==Organization== | |||
FCS consists of four banks and 56 associations, with each association operating as a cooperative. Governance is by the borrowers who are also shareholders. Funding comes from issuing securities on Wall Street, which are then insured by the Farm Credit System Insurance Corporation. Partnerships extend to various agricultural and rural development organizations to expand service offerings and expertise. | |||
==Impact and Outcomes== | |||
* **Achievements:** FCS has been a primary source of farm credit, holding around 40% of agricultural real estate debt in the U.S. | |||
* **Challenges:** Balancing the needs of traditional agriculture with emerging trends like organic farming or aquaculture. | |||
* **Unintended Consequences:** Potential for over-lending in certain sectors, leading to local economic bubbles. | |||
* Sponsor: | |||
* Federal Agency: [[Farm Credit Administration]] | |||
* Office: N/A | |||
==Background and History== | |||
The Farm Credit System was established by the [[Federal Farm Loan Act]] of 1916, aiming to provide a reliable source of credit for American farmers following the financial challenges of the early 20th century. Over time, it has evolved from focusing solely on farm loans to encompassing broader rural and agricultural finance. Key historical events include major legislative updates like the Farm Credit Act of 1971 and the Agricultural Credit Act of 1987, which reshaped its structure and operations. There's no specific end date, as it's designed to be an enduring support mechanism for rural America. | |||
Funding for the FCS comes from its operations, primarily through the issuance of securities. There isn't a defined funding end point; rather, it's an ongoing system supported by its financial activities and cooperative structure. | |||
==Implementation== | |||
The FCS operates through banks and associations that provide direct loans or credit services to farmers, ranchers, and rural communities. There is no defined end date as this is a continuous operation aimed at supporting agriculture. Leadership within FCS is distributed, but each association has a president or CEO. | |||
==See Also== | |||
* [[Federal Farm Loan Act]] | |||
* [[Farm Credit Administration]] | |||
==External Links== | |||
* https://www.farmcredit.com | |||
* https://www.fca.gov | |||
wikipedia:Farm Credit System | |||
===Social media=== | |||
* https://twitter.com/FarmCredit | |||
* https://www.facebook.com/FarmCredit | |||
==References== | |||
<references/> | |||
[[Category:Programs and initiatives]] | |||
[[Category:Farm Credit Administration]] | |||
== See also == | == See also == | ||